INCOME TAX ACT, 1961

Section 2(47)

Capital gains - Transfer under section 2(47) - Date of Allotment of flat vis-a-vis registration date -

Assessee challenged order of CIT(A) holding that assessee had held asset in question for a period of less than 36 months thus determining capital gains on sale of rights to a flat as “Short Term”. Case of assessee was that CIT(A) wrongly held that period of holding the asset was to be calculated from date of registration and not from the date of allotment. Assessee relied on decision of Supreme Court in Gurbax Singh v. Kartar Singh & Ors. 254 ITR 112 (SC), holding that a document on subsequent registration will take effect from the time when it was executed and not from the date of registration which in case of assessee was date of booking. Held: Letter issued by builder which recognized right of assessee in said property and builder agreed to reserve property for allotment subject to certain stipulations and conditions including payment terms. Upon perusal of terms, it was found that said letter created right in favour of assessee to get allotment of property in his name subject to certain terms and conditions as agreed upon between assessee and builder. Assessee acquired certain rights of allotment in a specific property. These rights were created in assessee's favour, by letter of builder. Subsequent letter as well as premises ownership agreement was nothing but improvement in said rights of assessee which were already created by first letter. Assessee had sold these rights through an agreement, therefore, what was acquired by assessee and what has ultimately been sold by assessee was pari-materia the same. Therefore, assessee acquired right on date of allotment and since holding period of same was more than 36 months, the resultant gains would be long-term capital gains in nature. Benefits of indexation was available to assessee.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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